Tuesday, December 14, 2010

Refusing To Face the Economic Facts of Life

WaPo columnist Michael Gerson, criticizing Senator Bernie Sanders for his 'simplistic' view of economic inequality, argues that social mobility--not economic equality-- is the key to a healthy capitalistic society:

Economic redistribution can meet some basic needs. We provide food stamps to relieve hunger or vouchers to make housing more affordable. But social equality is not achieved through redistributing cash. "Our research," argue Isabel Sawhill and Ron Haskins of the Brookings Institution, "shows that if you want to avoid poverty and join the middle class in the United States, you need to complete high school (at a minimum), work full time and marry before you have children. If you do all three, your chances of being poor fall from 12 percent to 2 percent."

So the main reasons for inequality are failing schools, depressed and dysfunctional communities and fragmented families. For the most part, inequality does not result from a lack of consumption by the poor but from a lack of social capital and opportunity. Addressing these challenges is more complex than fiddling with the top tax rate.

This does not release conservatives from responsibility because the distribution of social capital and opportunity is dramatically unequal. Economic inequality can be justified as the reward for greater effort - so long as there is also social mobility. In the absence of mobility, capitalism becomes a caste system. And this is what America, in violation of its self-image, threatens to become. The United States has less upward economic mobility among lower-income families than Canada, Finland or Sweden. Americans who are born into the middle class have a roughly equal chance of ascending or descending the economic ladder. But Americans born poor are likely to stay on its lowest rungs.

Addressing the actual causes of inequality should be common ground for the center-left and center-right - and politically appealing to American voters, who are generally more concerned about opportunity than income equality. A mobility agenda might include measures to discourage teen pregnancy; increase the rewards for work; encourage wealth-building and entrepreneurship; reform preschool programs; improve infant and child health; increase teacher quality; and increase high school graduation rates and college attendance among the poor. Children of low-income parents who gain a college degree triple their chance of earning $85,000 a year or more. If America had the same fraction of single-parent families as it had in 1970, the child poverty rate would be about 30 percent lower.

Really, who could disagree with Gerson's narrower point, that the cultural factors helping people rise from poverty into the middle class--and vice versa--are important and need to be supported.

But it seems to me that Gerson is missing the forest for the trees here. What has happened over the last 30 years in America economically has very little to do with social mobility of this kind. Rather, it is the the larger economic forces that issued in the Great Recession of 2008 that need to be addressed.

Among these are: the loss of our manufacturing/industrial base and the resulting loss of blue-color jobs; the financialization and accompanying securitization of our economy, with huge economic rewards going to the largely unproductive financial sector; the various economic bubbles that have wreaked havoc on our economy and society; the accumulation of vast amounts of public and private debt; the waging of hugely expensive wars around the world, increasing the debt and the militarization of our society; the swelling income and wealth inequality at the expense of the middle class; and so on.

These are the facts that most conservatives and neo-liberals have yet to confront. These are the facts that are riling our politics and dimming the hopes of our future.